What are your insurance requirements?
We require owners to have a landlord public liability insurance policy that names RPM as a co-insured (also known as additional insured) and covers losses related to the property. Our required minimum coverage is $500,000 for single family homes and $300,000 for condominiums. During onboarding, we will request proof of insurance from you.
If possible, please also ask your insurance provider to set a retroactive start date to the start date of your management agreement with RPM.
Remember, Landlord Liability insurance protects you (and us) from accidents at the property—for example, if the mailman trips and falls on the sidewalk and sues you. We are an agent for you and thus the mailman may also choose to sue us for this bodily injury. This is different from replacement coverage, which reimburses you for physical damage to the property. RPM only requires liability coverage—whether or not to get replacement coverage is up to you.
If you don’t have insurance yet, please contact a trusted Insurance Agent you can find or another option is National Real Estate Insurance Group if you have 1-5 units.
Why do I need to add Real Property Management Hampton Roads to my hazard insurance policy as an additional insured?
Why isn’t listing Real Property Management as additional/insurable interest enough? By adding Real Property Management Hampton Roads as an additional insured, you provide you and your insurance company additional liability coverage, which is explained after the following story:
A neighbor kid entered the backyard of a rental home, stepped in a hole, and broke his leg. The parents of the boy sued the tenant, the property owner, and the property manager. The property manager was not listed as an additional insured and had the standard indemnification clause in their management agreement. This indemnification clause was similar to the one that Real Property Management Hampton Roads has in its management agreement as well as every other property manager’s agreement.
Because the property manager was not listed on the homeowners’ policy, the homeowner’s insurance would not cover the property manager. Since the property manager was being sued and not covered by the owner’s policy, the property manager had to hire an attorney to defend themselves, just like the attorney for the insurance company was defending the property owner. So both the homeowner’s insurance company and the property manager were paying for an attorney to defend them. In both cases, the attorneys pointed the blame everywhere but their client. So the homeowner’s insurance is showing blame with the property manager and/or tenant. The property manager’s attorney is showing blame with the property owner and/or tenant.
In this case, the homeowner was found guilty of negligence and the homeowner’s insurance company paid the claim. However, the property manager had accumulated nearly $10,000 in attorney fees in its defense. The property manager, like Real Property Management Hampton Roads, had professional and liability insurance, but neither policy would cover the property manager’s legal expenses. Because of the property manager’s indemnification clause, which is a common clause in all property management agreements, the homeowner was held liable for the $10,000 in attorney fees to defend the property manager.
If the homeowner had listed the property manager as an additional insured, the insurance company would have equally defended the property manager as well as the homeowner and there would not have been any additional costs incurred by the homeowner.
I encourage you to talk to your insurance agent about the above scenario and be sure to list Real Property Management Hampton Roads as an additional insured for your rental property. Your agent may try to talk you into listing Real Property Management Hampton Roads as an insurable interest or as additional interest, but this is not the same thing. Have them explain the difference and the risk that is assumed by you, the homeowner.
Some companies may refuse to list your property manager as an additional insured. My recommendation is that you send them a copy of your management agreement and express your concern for your liability. They’ll probably agree to add the property manager. They may require that you pay a fee to do so, but the fees I have seen are very little and worth the peace of mind. We list a number of companies as additional insured on our company policy and we pay a small fee to do so. If you have any questions or concerns, feel free to contact me.
What does it mean to indemnify Real Property Management and the property owner?
Indemnification is a term that means if a loss occurs, a party who sustains the loss (Real Property Management and the property owner) should be restored to a financial position approximately the same as if the loss did not occur – no better or no worse – by the renter/tenant who originated and caused the loss/damage.
Does Liability Landlord Insurance Policy cover my tenant’s personal property?
Liability Landlord Insurance Policy covers the owner/landlord’s property and does not cover the tenants personal property.
How is traditional renter’s insurance different?
The insurance commonly referred to as an HO4 policy, or renter’s insurance, is coverage purchased by the resident, in his/her name. The policy typically covers the renter’s personal belongings, and liability coverage. HO4 policies can be customized to cover various perils, or “risks,” and broadened to include damages that were not caused by the renter. For each level of coverage needed, insurers set rates. Total premiums depend upon coverage selections and the loss history of the tenant/renter.
